As we approach the close of the year, most companies are getting ready to sign off on their next budgets. You've hopefully convinced executives and other managers that your programs are keeping employees safe and benefiting their bottom line – but have you created a realistic budget to keep them going?
Even if you're working at a small or newly formed company, an overly simplistic or poorly planned budget won't cut it. Most businesses are operating on thin margins, and if you want to keep your company safe and out of the red, you'll need to carefully consider each item you plan to purchase. To make sure that your budget gets approved – and that you can actually stick to it throughout the year – avoid these five safety budgeting pitfalls.
1. Underestimating Your Costs
How much are your training programs, inspections, repairs and other initiatives really going to cost? It's tempting to assume you'll only need the bare essentials, but you've got to account for the time and labor involved in taking employees away from their regular jobs and having them work on safety-related tasks.
Unless you’re using a digital safety software system, paper-based safety materials, PPE replacements and equipment repairs will also take their toll, making safety management less efficient. Make sure you're adding these and other must-haves to your budget before including optional programs and purchases.
2. Relying on Unrealistic Projections
Similarly, you need a realistic view of how much revenue your company is going to make. Is production scheduled to increase in the next year? Are old clients signing back on? Have there been any delays that could lead to a lower-than-expected income? Decision-makers can't sign off on a budget that doesn't take these factors into account.
3. Forgetting About Cash Flow
Yearly revenue isn't the only income you need to consider. Unless your company operates on unusually large margins, quarterly, monthly and even weekly cash flow will influence your regular spending limits. Small, day-to-day expenses may be accounted for, but when are you going to be able to make big replacements or conduct inspections, repairs and training on a large scale?
Even if you have a good idea of how much money your company will make over the course of a year, you'll need to adjust your safety management programs and purchasing schedules to account for cash flow.
4. Not Taking Taxes into Account
Safety management may be your first concern in budgeting for safety management, but decision-makers need to know what will be left in the company coffers after taxes. Do you understand the deductibility of each item on your budget? Do you have a rough idea of the company's after-tax profit for this year, and do you know your executives' goal for the new year? Keep these figures in mind as you consider the impact of your department's budget on the company's bottom line.
5. Purchasing the Wrong Management Tools
Manually tracking incidents, investigations, audits and training can be a nightmare, while the right safety software tools can make your life far easier. Even though these tools lead to long-term ROI, your yearly budget must account for the expense. Individually purchasing different tools for MSDS creation, training, JSA management and other safety-related tasks may cost tens of thousands of dollars per year, while our integrated solution is all-inclusive and much more affordable. If your safety budget is already stretched thin, you can't afford not to opt for the more cost-effective solution.
Want to find out more about the cost of implementing our most popular safety software programs? Contact us today for a free demo.